Federal Bankruptcy Exemptions

Who Can Use the Federal Bankruptcy Exemptions?

The answer depends on which state you live in. Every state has its own unique set of bankruptcy exemptions. In contrast, the federal bankruptcy exemptions are found in the federal bankruptcy code and do not differ from state to state. Most states require bankruptcy filers to use the state exemptions. Some states allow debtors to choose between the state exemptions or the federal bankruptcy exemptions. If you have a choice, you must one or the other — you cannot mix and match between the lists of state and federal exemptions.

Currently, if you live in one of the following states, you can choose to use the federal bankruptcy exemptions. If not, then you are limited to your state’s exemptions. These states include Alaska, Arkansas, Connecticut, District of Columbia, Hawaii, Kentucky, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Washington, and Wisconsin.

What Property Do the Federal Bankruptcy Exemptions Protect?

The following are some of the current federal exemption amounts. The amounts are adjusted every three years in April and the last adjustment occurred in 2013. If there is no dollar amount stated, you can exempt the entire asset regardless of its value. Also, if you are a married couple filing jointly, you can double the exemption amounts listed below.

Federal Homestead Exemption

The homestead exemption is designed to protect the equity in your principal place of residence. Keep in mind that you cannot use the homestead exemption on your investment or rental properties. You can currently protect $22,975 of equity in your home under the federal exemptions.

Personal Property Exemptions

Personal property includes all property you have other than real estate. The following are some of the most important federal personal property exemptions:

Bankruptcy Exemptions

David S. Osterman 603-626-5452

Both individuals and businesses may find themselves with more debts than they can pay when due. In such cases, filing for bankruptcy may provide a solution to what seems like an insurmountable problem.

Once considered a last resort, bankruptcy has evolved into an accepted method of resolving serious financial problems. If you are facing serious financial challenges, it is important to seek the counsel of an experienced bankruptcy attorney to determine whether filing under Chapter 13 is right for you.